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Scarce or Abundant? The Economics of Natural Resource Availability

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  • Neumayer, Eric

Abstract

Most natural resources that are used in production are non-renewable. When they become depleted they are lost for future use. Does it follow that the limited availability of natural resources will at some time in the future constrain economic growth as many environmentalists believe? While classical economists have shared the belief in limits to growth, the distinctive feature of modern neoclassical economics is its optimism about the availability of natural resources. This survey suggests that resource optimism can be summarised in four propositions. First, a rise in the price of a resource leads to a substitution of this resource with another more abundant resource and to a substitution of products that are intensive in this resource. Second, a rise in the price of a resource leads to increased recycling of the resource and to the exploration and extraction of lower quality ores. Third, man-made capital can substitute for natural resources. Fourth, technical progress increases the efficiency of resource use and makes extraction of lower quality ores economical. In a critical analysis of these four propositions it is shown that while the conjecture that natural resources will never constrain future economic growth is logically conceivable, we do not and indeed cannot know whether it will be possible in practice to overcome any resource constraint.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economic Surveys.

Volume (Year): 14 (2000)
Issue (Month): 3 (July)
Pages: 307-35

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Handle: RePEc:bla:jecsur:v:14:y:2000:i:3:p:307-35

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Cited by:
  1. De Santis, Roberto A., 2003. "Crude oil price fluctuations and Saudi Arabia's behaviour," Energy Economics, Elsevier, vol. 25(2), pages 155-173, March.
  2. Andrei V. Bazhanov, 2009. "A constant-utility criterion linked to an imperfect economy affected by irreversible global warming," EERI Research Paper Series EERI_RP_2009_03, Economics and Econometrics Research Institute (EERI), Brussels.
  3. Plamen Tchipev, 2006. "Evolutionary and Institutional Analysis of the Scarcity Concept in the Contemporary Paradigm of the Neoclassical Economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 109-120.
  4. Arslan Razmi, 2013. "Environmental Macroeconomics: Simple Stylized Frameworks for Short-Run Analysis," UMASS Amherst Economics Working Papers 2013-02, University of Massachusetts Amherst, Department of Economics.
  5. Bazhanov, Andrei, 2011. "Investment and resource policy under a modified Hotelling rule," MPRA Paper 32428, University Library of Munich, Germany.
  6. Bazhanov, A., 2011. "The Dependence of the Potential Sustainability of a Resource Economy on the Initial State: a Comparison of Models Using the Example of Russian Oil Extraction," Journal of the New Economic Association, New Economic Association, issue 12, pages 77-100.
  7. Bazhanov, Andrei, 2008. "Sustainable growth in a resource-based economy: the extraction-saving relationship," MPRA Paper 12350, University Library of Munich, Germany.
  8. Wittmann, Nadine, 2013. "OPEC: How to transition from black to green gold," Energy Policy, Elsevier, vol. 62(C), pages 959-965.
  9. Fabbri, Giorgio, 2007. "Non-renewable resources and growth, the case of the oil: a simple endogenous model," MPRA Paper 5718, University Library of Munich, Germany.
  10. Bazhanov, Andrei & Belyaev, Alexander, 2009. "Адекватность Закрытой Модели Для Российской Экономики В Задаче Сравнительного Анализа Энергетической Стра�," MPRA Paper 15109, University Library of Munich, Germany.
  11. Gutiérrez Huerta, María José & Iza Padilla, María Amaya & Agnani, Betty, 2004. "Growth in Overlapping Generation Economies with Non-Renewable Resources," DFAEII Working Papers 2002-22, University of the Basque Country - Department of Foundations of Economic Analysis II.
  12. Jamil, Faisal, 2012. "Impact of different public E&P policies on natural gas reserves and production in Pakistan," Resources Policy, Elsevier, vol. 37(3), pages 368-374.
  13. Bazhanov, Andrei, 2011. "Зависимость Долгосрочного Роста Ресурсной Экономики От Начального Состояния: Сравнение Моделей На Примере �," MPRA Paper 35888, University Library of Munich, Germany.
  14. Simon Dietz & Eric Neumayer, 2007. "Weak and strong sustainability in the SEEA: concepts and measurement," LSE Research Online Documents on Economics 3058, London School of Economics and Political Science, LSE Library.

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